I am looking at what skills will be needed for the mid-century Chief Compliance Officer (CCO). Moving into the CCO chair today is far beyond compliance expertise and legal knowledge. In Part 1 of this two-part series, I reviewed the soft skills most current CCOs have. In part 2, I want to consider the strong social skills a CCO will need as we move into 2030 and beyond. In a recent Harvard Business Review article (HBR), entitled “The C-Suite Skills That Matter Most”, authors Raffaella Sadun, Joseph Fuller, Stephen Hansen, and PJ Neal looked at this issue in the context of the Chief Executive Officer (CEO) position. I have adapted their work for the CCO role.
Training for new CCOs must change as well. No longer will a law school degree with one course in the Foreign Corrupt Practices Act (FCPA) be sufficient as a basis for a CCO. CCOs will need to systematically build social skills. This can certainly start in law or business school, but companies need to consider this role in their internal development for CCO candidates and indeed their entire corporate compliance function. This means going beyond simply preparing up and grooming compliance professionals to become a CCO through developing a “deep competence in a variety of administrative and operational roles.” This is because the mid-century CCO will need to “form constructive relationships with colleagues, customers, regulators, and suppliers” to fulfill the obligations of a corporate compliance function going forward.
As I noted earlier in Death of Dos Santos and Leadership at the Top, the background due diligence process around CEOs is becoming more important. But more than computer assisted research for background checks, the authors believes that “getting references is also problematic.” Most CCO searches are conducted with a high degree of confidentiality. However, the people conducting CCO interviews and those providing references are likely to be part of the “same small, homogeneous networks as most of the candidates, which significantly heightens the risk of bias in the decision-making process. They might mistakenly assume that those individuals possess broadly applicable social skills simply because they connected easily with them in interviews.”
In their executive development programs, companies today need a systematic approach to building and evaluating social skills for all executives, including compliance professionals and specifically CCOs. The authors believe such skills “may even need to prioritize them over the “hard” skills that managers presently favor because they’re so easy to assess. Companies should place high-potential leaders in positions that oblige them to interact with various employee populations and external constituencies and then closely monitor their performance in those roles.”
Beyond the assessment of social skills, companies need to highlight social skills development for the compliance function and potential CCO candidates. Interestingly, the authors believe that it is “inherently risky to put an outsider—even someone carefully vetted—in a senior role. Companies thus will benefit from a “grow your own” approach that allows internal up-and-comers to hone and demonstrate a range of interpersonal abilities.”
Moving forward the authors believe that more often, companies are “on the lookout for people with highly developed social skills—especially if their organizations are large, complex, and technologically intensive.” It is the final intensive technical requirement that many compliance professionals and CCO-types are lacking in; most particularly those with a legal education. Somewhat deflatingly, the authors report it is an “open question” as to whether companies will succeed in making hires with the requisite social skills going forward. They write, “The answer will depend in part on whether they can figure out how to effectively evaluate the social skills of job candidates, and whether they decide to make the cultivation of social skills an integral component of their talent-management strategies.”
But the business reality is that companies must do so to remain competitive. Talent acquisition and retention will be one of the most important keys for businesses to survive and thrive into the 2030s and beyond. Developing internal talent with these skills would clearly be the optimum approach for an organization to take. The authors also believe that companies should encourage law and business schools “to place more emphasis on social skills in their MBA and executive-level curricula, and they should challenge search firms and other intermediaries to devise innovative mechanisms for identifying and assessing candidates.”
But this is beyond simply internal development of the top candidates from law and business schools. When “recruiting and evaluating outside talent, they must prioritize social skills. The same is true when it comes to measuring the performance of current [CCOs] and setting their compensation. In addition, firms should make strong social skills a criterion for promotion, and they should task supervisors with nurturing such skills in high-potential subordinates.”
As much as the compliance profession has evolved over the past 10 years, this evolution will only continue with greater speed going forward. Simply consider how much business has changed forever since the Russian invasion of Ukraine and you can begin to see why a CCO, and compliance professional, will need a much wider variety of social skills. Change in the way Supply Chain risk will be managed; how trade and economic sanctions will play a more strategic role in each organization, anti-corruption detection, prevention and enforcement has now become a national security issue of the United States, cybersecurity and data privacy are on the front plate of every organization and environmental, social and governance (ESG) will lead many corporate efforts going forward.
The bottom line is that the business world has changed and not only must CCOs change with it but the manner in which companies acquire and retain compliance talent must change as well.
Tag: compliance
Compliance into the Weeds is the only weekly podcast that takes a deep dive into a compliance-related topic, literally going into the weeds to more fully explore a subject. In this episode, we deep dive into the recent New York Department of Financial Services enforcement action against Carnival Cruise Lines for failures in its cybersecurity reporting obligations. Highlights include:
· Why is Carnival Cruise Lines subject to the DFS?
· What violations occurred?
· Why were there false certifications?
· What were the tactical cyber security violations?
· Were they material?
· Lessons for the compliance professional.
Resources
Matt in Radical Compliance
What skills will be needed for the mid-century Chief Compliance Officer (CCO) [yes just a few more years to 2030 and ‘mid-century’]. Moving into the CCO chair today is far beyond compliance expertise and legal knowledge. What CCOs need even more as we move into 2030 and beyond are strong social skills. Compliance is becoming more complex and tech-centered; workforce diversity is growing; and firms face greater public scrutiny than ever before. These requirements are far beyond a Foreign Corrupt Practices Act (FCPA) or even compliance course in law school. Going forward, CCOs will need to be adept communicators, relationship builders, and people-oriented problem solvers. To succeed in the future, companies will need to focus on those skills when they evaluate CCO candidates and develop in-house talent in their compliance function. In a recent Harvard Business Review article (HBR), entitled “The C-Suite Skills That Matter Most”, authors Raffaella Sadun, Joseph Fuller, Stephen Hansen, and PJ Neal looked at this issue in the context of the Chief Executive Officer (CEO) position. I have adapted their work for the CCO role.
Previously, companies could look for good technical skills in a CCO. But today, companies need to seek out and hire CCOs “who are able to motivate diverse, technologically savvy, and global workforces; who can play the role of corporate statesperson, dealing effectively with constituents ranging from sovereign governments to influential NGOs; and who can rapidly and effectively apply their skills in a new company, in what may be an unfamiliar industry, and often with other colleagues in the C-suite whom they didn’t previously know.” Getting it wrong can be a disaster for the company. Witness the train wreck involving the Activision Blizzard, Inc. CCO, when that company’s scandal broke.
Previously, the CCO had to use influence to try and get compliance accomplished in an organization. In the early part of the past decade, Jenny O’Brien talked about about techniques for a CCO to employ to help influence decision-making within an organization.
- Understand the products and services that your company offers but also the challenges that your business development team will face out in the world.
- Active Listening. Work constantly at active listening, which is listening, thinking and then speaking.
- Connections with other functions in an organization.
- The CCO does not need center stage.
- Make a win look like a win for everyone.
- The Triple ‘C’- Calm, cool and collected. Don’t let them see you sweat.
- Know your stuff.
However, the authors demonstrate that these soft skills are no longer enough for a CCO, even one with high technical competence in compliance programs. A critical first step is to develop greater clarity about what it now takes for a CCO to succeed as the range of necessary skills appears to have expanded. This is more than the ‘soft-skills’ approach articulated by O’Brien but more ‘social skills,’ “including a high level of self-awareness, the ability to listen and communicate well, a facility for working with different types of people and groups, and what psychologists call “theory of mind”—the capacity to infer how others are thinking and feeling.”
By looking at the reasons for these changes, the authors identify several areas that CCOs previously were not required to understand but are now mandatory for a mid-21st century compliance program.The focus on social skills is especially evident in large companies. This is even more true “at publicly listed multinational enterprises and those that are involved in mergers and acquisitions. These patterns are consistent with the view that in larger and more complex organizations, top managers are increasingly expected to coordinate disparate and specialized knowledge, match the organization’s problems with people who can solve them, and effectively orchestrate internal communication. For all those tasks, it helps to be able to interact well with others. It also reflects the web of critical relationships that leaders at such firms must cultivate and maintain with outside constituencies.” This of course includes the five sets of stakeholders identified in the Business Roundtable’s Statement on the Purpose of a Corporation. Again this reality is even considered in the 2013 COSO Internal Control-Integrated Framework.
There is no bigger change to the skill set of the CCO than around information and information-technology systems, i.e., data and data analytics. The authors cited to Peter Drucker for the following, “The more we automate information-handling, the more we will have to create opportunities for effective communication.” This means the CCOs and corporate compliance programs which “rely significantly on information-processing technologies today also tend to be those that need leaders with especially strong social skills.”
In compliance, when companies automate routine compliance tasks, “their competitiveness hinges on capabilities that computer systems simply don’t have—things such as judgment, creativity, and perception. In technologically intensive firms, where automation is widespread, leaders have to align a heterogeneous workforce, respond to unexpected events, and manage conflict in the decision-making process, all of which are best done by managers with strong social skills.” The authors conclude, “as more tasks are entrusted to technology, [CCOs] with superior social skills will be in demand at all levels and will command a premium in the labor market.”
Another new area is in social media and networking technologies. As companies move away from shareholder primacy and focus more broadly on stakeholder capitalism, as outlined in the Statement on the Purpose of a Corporation, CCOs will be expected to be public figures. They will meet and “interact with an increasingly broad range of internal and external constituencies but to do so personally and transparently and accountably.” Moreover, CCOs, and other corporate officers, will be required to operate in “real time, thanks to the increasing prevalence of both social media (which can capture and publicize missteps nearly instantaneously) and network platforms such as Slack and Glassdoor (which allow employees to widely disseminate information and opinions about their colleagues and bosses).” CCOs will be required to “be constantly attuned to how their decisions are perceived by various audiences. Failing to achieve their intended purposes with even a handful of employees or other constituents can be damaging.”
Join us tomorrow where we consider the way forward for the CCO role at mid-century.
The Compliance Life details the journey to and in the role of a Chief Compliance Officer. How does one come to sit in the CCO chair? What skills does a CCO need to navigate the compliance waters in any company successfully? What are some of the top challenges CCOs have faced, and how did they meet them? These questions and many others will be explored in this new podcast series. Over four episodes each month on The Compliance Life, I visit with one current or former CCO to explore their journey to the CCO chair. This month, my guest is Joe Burke, most recently the Chief Ethics & Compliance Officer and Employment Counsel, Quest Software Inc.
From Kentucky Fried Chicken in Louisville, Joe moved to Round Rock, TX, to work at Dell Inc. He began in Federal Government Sales, where he developed a compliance program for GSA and TAA work for Dell Federal. He moved into compliance with the “big switch” from commercial legal to Chief Compliance Counsel. In this role, he was instrumental in building a new FCPA program using the Federal Sentencing Guidelines as a guideline.
Resources
Joe Burke LinkedIn Profile
Thomas Fox and Michael DeBernardis discuss energy cases considered FCPA violations, highlighting Panalpina Settlement Day, the uncovered bribery methods, and its implications on the future of compliance, the written policies, and the solutions to commerce and transactions in higher-risk jurisdictions.
Key points discussed in the episode:
✔️ Tom Fox introduces the cases involving Shell, Transocean, Tidewater, Pride International, and Noble.
✔️ Michael DeBernardis describes the company’s methods as a hub-and-spoke arrangement and lays out the Department of Justice’s investigative process. The case has planted the seeds of the pilot program and corporate enforcement policy. The DOJ has become more deliberate in announcing settlements
✔️ Due diligence requires visibility across all aspects of the business. Thomas Fox shares a snippet of advice from a shipping company executive: “If you have a vendor with a 100% success rate, you have a problem.” Any business model based on bribery and corruption never ends well.
✔️ Panalpina’s methods were an open secret across other energy companies, designing ways to circumvent Nigerian customs. Monitoring during this time was less rigorous.
✔️ Due diligence is an ongoing process of improvement. High-risk jurisdictions for particular transactions are now thrown at the forefront.
✔️ Companies outside of the oil and gas industry have started to reconsider their strategies in high-risk areas. The solution is not to stop doing business completely but to work with companies that do compliance.
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Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.
In this episode of the FCPA Compliance Report, I am joined by fan favorite James Koukios, partner at Morrison and Foerster. In this episode we consider some of the key ABC issues in the always great MoFo Monthly Top 10 International Anti-Corruption Developments for January 2022. Highlights of this podcast include:
- Opinion Release 22-01.
- Summary Judgment granted in bribery related breach of contract case-use of bribery allegations to get out of contract.
- FIFA defendants raise local law defense. What is it and how is it raised and why it has never been successful in a FCPA context
- Former CEO of Pemex charged. Is Mexico finally stepping up to ABC enforcement?
- South African anti-corruption commission. Will this finally help SA move past capture and a culture of corruption.
Resources
James Koukios on the MoFo website
January International Anti-Corruption Newsletter here
Welcome to the Great Women in Compliance Podcast, co-hosted by Lisa Fine and Mary Shirley.
Mary and Lisa end the second GWIC semester with Wendy Badger. Wendy is Global Compliance Counsel at Tennant Company, where she oversees their global ethics and compliance program. She has worked in-house and in law firms, taking her experiences from one space and applying them to others. She is also an author, regular speaker, friend, and mentor to many – and one of the “OG GWICS” who has made this community grow.
Lisa and Wendy discuss a number of different topics, starting with remote investigations, which is top of mind for many of us these days. They talk about pitfalls, lessons learned, and some practical tips, including one from Wendy about how she makes interviewees more comfortable. They also talk about the impact of remote work on networking over the past few years, focusing on women and how that may change as the world continues to open up.
Wendy also shares some of her favorite advice and how she has made some of that advice her own. She also told Lisa what has now become one of the best stories about public speaking on the podcast!
GWIC is going on vacation for the next few weeks but will be back on July 20. We hope everyone remembers to take some time off – whether off social media, off from work, or just time for yourself.
The Great Women in Compliance Podcast is on the Compliance Podcast Network with a selection of other Compliance-related offerings to listen to. If you enjoy this episode, please rate it on your preferred podcast player to help other like-minded Ethics and Compliance professionals find it. You can also find the GWIC podcast on Corporate Compliance Insights, where Lisa and Mary have a landing page with additional information about them and the story of the podcast. Corporate Compliance Insights is a much-appreciated sponsor and supporter of GWIC, including affiliate organization CCI Press publishing the related book, “Sending the Elevator Back Down, What We’ve Learned from Great Women in Compliance” (CCI Press, 2020).
You can subscribe to the Great Women in Compliance podcast on any podcast player by searching for it, and we welcome new subscribers to our podcast.
Join the Great Women in Compliance community on LinkedIn here.
The Compliance Life details the journey to and in the role of a Chief Compliance Officer. How does one come to sit in the CCO chair? What skills does a CCO need to successfully navigate the compliance waters in any company? What are some of the top challenges CCOs have faced, and how did they meet them? These questions and many others will be explored in this new podcast series. Over four episodes each month on The Compliance Life, I visit with one current or former CCO to explore their journey to the CCO chair. This month, I take things in a different direction as I host my first non-CCO compliance professional, Joya Williams, and detail her journey in compliance.
In this concluding episode, Joya discusses why she is so passionate about Compliance and the opportunities now open for someone to get into the compliance field that were not as prevalent when she began. She provides advice for someone who wants to get into compliance but does not have an advanced degree. (Hint: the key is networking) She concludes with her tenure as President of the Greater Houston Business and Ethics Roundtable, her role as President, and compliance down the road.
Resources
Joya William LinkedIn Profile
Richard Blank is the founder, CEO, and head bilingual trainer at Costa Rica’s Call Center, a business process outsourcing (BPO) telemarketing company. They offer outbound and inbound telemarketing solutions of the highest quality. Tom Fox welcomes him to this week’s show to talk about Costa Rica’s Call Center, how they help their clients, why he opened a call center in Costa Rica, and how to lead a successful call center in a foreign country.
The Core of Costa Rica’s Call Center
Tom asks Richard why he decided to open a call center in Costa Rica and how the term “Learning through the Proletariat” influenced his business model. Richard explains that as a CEO who works among people, you learn the importance of training and keeping your employees and customers. “One thing that I heard most sitting amongst people that are in a call center industry is that they feel expendable,” he tells Tom. To counteract this, he invests in his employees’ careers by promoting them and teaching them English so that they have pride and security in their job. Additionally, he has several retro arcade game machines that allow the employees to meet colleagues from other departments, and to relax, “or even hang out with el jefe”. He explains that this creates a safe, enjoyable workplace culture and an atmosphere of trust and institutional fairness.
BPO Telemarketing Outsource Company
Tom asks Richard to define a BPO telemarketing outsourcing company. BPO stands for business process outsourcing, and it is done in several parts of the world, including the Philippines where it is known as offshore. However, since Costa Rica is so close to the United States, it is considered a near-shore outsourcing company. “[That] could be either a blended or mixed center where they work on multiple accounts; usually it’s for overflowing and answering service,” he explains. Every one of Costa Rica’s Call Center’s agents is assigned to and works specifically for a client. He explains why having a brick-and-mortar call center is more beneficial for them versus being completely remote: problems like Internet redundancy and electricity failure plague remote workers, while at the in-person center, there are multiple tools and resources to hedge technical difficulties.
Nearshoring and Outsourcing
Tom asks why Richard chose Costa Rica for a BPO center and what’s the difference in having a company in essentially the same time zone as the US. Richard describes Costa Rica’s ideal location, and that it’s a democratic society with no standing army. In addition, the country’s literacy rate is 95%, and it has the best infrastructure in Central America. They also have highly skilled and experienced workers, some of whom have lived in the US and have dual citizenship. Furthermore, clients like the fact that agents are attuned to the North American market. It is also a safe place to visit for tourism.
Resources
Richard Blank | LinkedIn | Twitter | Instagram | YouTube
Costa Rica’s Call Center | Facebook
Categories
Watson Disciplinary Hearing to Begin
The sorry spectacle of Deshaun Watson continues to haunt the National Football League (NFL). Today a disciplinary hearing starts with US District Court Judge Sue L. Robinson, as the disciplinary officer appointed by the NFL and players association. The outcome of this hearing will be a recommendation of discipline for Watson from his misconduct. Watson has been accused by 24 women of sexual harassment for a variety of sex acts he allegedly performed on them, with them or to them. No doubt anticipating this hearing, Watson settled 20 of these cases last week.
According to SI.com, the lawsuits “detailed graphic accounts of sexual harassment and sexual assault that occurred during massage therapy sessions. The accounts range from Watson allegedly refusing to cover his genitals to the quarterback “touching [a plaintiff] with his penis and trying to force her to perform oral sex on him…The latest suit detailed that Watson masturbated and ejaculated on the plaintiff without her consent. It was expected that more lawsuits could be on the horizon.”
The discipline levied against Watson will be a critical factor in the NFL regaining any credibility in this matter. SI.com reported the NFL will ask for an ‘indefinite suspension’ so that the league can protect itself if more negative information comes out in the upcoming civil trials. Settlement negotiations for a one year agreed suspension broke down as Watson still believes he did nothing wrong. The NFL Players Association (NFLPA) also points to the essential meaningless disciple given the teams owners who allegedly engaged in some form of untoward sexual conduct, with SI.com reporting “The NFLPA argued for a lighter punishment, pointing to a precedent set in cases involving three of the league’s owners—the Commanders’ Daniel Snyder, Patriots’ Robert Kraft and Cowboys’ Jerry Jones.” Unfortunately for Watson, players are always given much more severe discipline than owners (See Brady, Tom re: Deflategate).
According to the New York Times (NYT), “the first public allegation against Watson of sexual misconduct during a massage appointment was made in March 2021, resulting in an avalanche of lawsuits filed by additional women. The claims against Watson involved massage appointments he had in 2020 and early 2021, when he played for the Houston Texans. He was traded to Cleveland in March after a grand jury in Harris County, Texas, declined to indict him on criminal charges. The Browns gave Watson an unprecedented, fully guaranteed five-year, $230 million contract.
What about the Cleveland Browns and their signing of Deshaun Watson? How much due diligence did Cleveland do before it signed Watson to a fully guaranteed $231 million contract. After signing the contract, the NYT broke the story that Watson had used “at least 66 different women in just the 17 months from fall 2019 through spring 2021” rather than the 40 in five seasons he had previously claimed. Conor Orr, writing in SI.com, reported that the Browns had engaged in due diligence the team described as an “odyssey” to become “comfortable” with Watson. He went on to add, “If nothing in the Times report was new information to the Browns, they should come out and admit as much. If much of what surfaced in the Times report is new information to the Browns, they should come out and admit as much.” What do you think Watson told the Browns when they asked, “Is there anything else we need to know about?”
The Browns face a looming public relations disaster for their actions. If and when Watson ever takes the field for the Browns, the protests will be loud and boisterous with this person they have now gotten ‘comfortable’ with enough to give him the richest contract in the history of the NFL (did I mention it was ‘fully guaranteed’?)
Of course, there is the question of knowledge and ultimate liability of his prior employer, the Houston Texans. After the NYT story broke, the plaintiffs’ attorney Tony Buzbee announced he would be adding the Texans to his lawsuit. He did so this week. As reported by the Houston Chronicle, the Texans claim that when the story broke back in March 2021, the team “issued a statement that said the post was “the first time we heard of the matter” and the organization hoped to “learn more soon.”” However, according to the amended claim, either the Texans knew all along or failed to do so through conscious indifference.
It turns out that the Texans had provided Watson with a form non-disclosure agreement (NDA) when he said one of the message therapists raised a claim against him back in 2020. Additionally, the Texans were allegedly aware of Watson not using the Texans facility for massages with team therapists and looking on the internet for his own set of therapists even when using non-Texan facilities. Of course, there is also now the allegation that Watson used 66 different therapists over 17 as noted above. Did the Texans know, or should they have known?
We have a full cacophony of allegations of sexual harassment, actual knowledge or conscious indifference, failure to engage in substantive due diligence, likely discipline for the player but not enabling teams with an appeal to the NFL Commissioner and at least four trials in the offing. Just imagine how much worse it will get for everyone involved.